The prolactin receptor (PRLR) belongs to the superfamily of cytokine/growth hormone/prolactin receptors. Members of this family do not contain a tyrosine kinase domain but are associated with cytoplasmic kinases of the Jak family. Here, we examine different mutants of the PRLR with respect to their ability to associate and activate the kinase Jak2 and the transcription factor Stat1. Moreover, using a biological assay system we are able to correlate these activities with activation of prolactin-responsive gene transcription. Our results indicate that interaction between Jak2 and PRLR requires a proline-rich sequence in the membrane proximal region of the receptor, which is conserved among the different members of the cytokine receptor superfamily. We also show that association of Jak2 with the receptor is sufficient for activation of the kinase as well as the transcription factor Stat1. Moreover, our findings indicate that association of PRLR with Jak2 is necessary but not sufficient for the transmission of a lactogenic signal. We have identified two other cytoplasmic regions of the PRLR that are required for activation of transcription. These two regions are located between boxes 1 and 2 and are in the carboxyl-terminal tail of the receptor. These sites probably involve specific interactions with other effector molecules.